The Statutory and Regulatory Scheme

• Author: Kenneth L. Dorsney
• Pages: 1-27

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chapter 1

The Statutory and

Regulatory Scheme

I. The Drug Price Competition and Patent Term

Restoration Act of 1984 (aka the Hatch-Waxman Act)

In 1984 the Drug Price Competition and Patent Term Restoration Act

of 1984, commonly known as the Hatch-Waxman Act, was passed into

law.1 The act was intended to “strike[] a balance between two potentially

competing policy interests—inducing pioneering development of pharma-

ceutical formulations and methods and facilitating efficient transition to

a market with low-cost, generic versions of those pioneering inventions at

the close of a patent term.”2

The U.S. Court of Appeals for the Federal Circuit’s 1984 decision in

Roche Products v. Bolar Pharmaceutical3 is often described as a catalyst

for the passage of the Hatch-Waxman Act. But the circumstances lead-

ing to the decision in Bolar and the passage of the Hatch-Waxman Act

shortly thereafter should be recognized as the culmination of many years

Update revisions prepared and reviewed by Jim M. Lennon, Partner, Young Conaway

Stargatt & Taylor, LLP,and Guy Donatiello, Senior Vice President, Intellectual Property,

Endo Pharmaceuticals Inc. The original authors of this chapter, in addition to Mr. Lennon,

are Christopher E. Jeffers, Ph.D., Partner, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,

P.C.; Malcolm K. McGowan, Ph.D., Partner, Cermak Nakajima & McGowan LLP; Bernard

A. Brown, II, Ph.D., Associate, Womble Carlyle Sandridge & Rice, LLP; and John B. Forrest,

IV, Associate, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

1. Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified at 21 U.S.C. §§ 355, 360cc; 35

U.S.C. §§ 156, 271), 21 U.S.C. 355(j)(2)(A), as amended by the Medicare Prescription Drug

Improvement and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 (2003)

(collectively, the Hatch-Waxman Act).

2. See Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 601 F.3d 1359, 1360 (Fed. Cir.

2010) (citing Andrx Pharms., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002)),

rev’d on other grounds, 132 S. Ct. 1670 (2012).

3. 733 F.2d 858 (Fed. Cir. 1984).

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CHAPTER 1

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of tension and shifting over how to best structure statutory incentives in

the pharmaceutical industry.

Movement toward the Hatch-Waxman compromise developed over

many years. Notably, in the late 1950s and early 1960s it became known

that the use of thalidomide, a sedative frequently prescribed to pregnant

women experiencing morning sickness, significantly increased the risk of

birth defects. The thalidomide scare led to the 1962 amendments to the

Federal Food, Drug, and Cosmetic Act (FDCA), requiring all new drugs

to be proven safe and effective prior to approval by the Food and Drug

Administration (FDA).4 The new requirements were seen to discourage

entry by generic manufacturers.5 Meanwhile, branded pharmaceutical

manufacturers pushed for additional protections against entry by generic

manufacturers. In 1978 President Carter recommended patent term res-

toration for pharmaceuticals and any other products that required regula-

tory review, to compensate for the time lost to the review, by extending a

patent’s term.6 By 1983, debate over the Drug Price Competition Act raged

in Congress.7 The Bolar decision in 1984 was an important event leading

to the passage of the compromise Hatch-Waxman Act, because the Bolar

decision highlighted the public policy tensions for the pharmaceutical

industry that only Congress could properly address.

Roche Products, a brand-name pharmaceutical company, was the

maker of Valium, the formulation for which was protected by patent.

Generic manufacturer Bolar Pharmaceuticals tested the chemical formu-

lation of Valium, before the expiration of Roche’s patent on that formula, to

determine if Bolar’s generic product was bioequivalent to Valium in order

to have an FDA-approved generic ready to market upon the expiration of

Roche’s patent.8 The determination of generic bioequivalence to a previ-

ously approved drug was and is necessary to obtain FDA approval for a

generic version of the drug.9

Roche brought a patent infringement suit against Bolar for this use

of Roche’s patented formulation, because a U.S. patent provides its owner

4. Pub. L. No. 87-781, 76 Stat. 780 (codified at 21 U.S.C. §§ 321, 331–32, 348, 351–53,

355, 357–60, 372, 374, 376, 381).

5. G.J. Mossinghoff, Overview of the Hatch-Waxman Act and Its Impact on the Drug

Development Process, 54(2)

FOOD DRUG L.J.

187–94 (1999).

6. Id. at 187.

7. Bolar, 733 F.2d 865 (citing Drug Price Competition Act of 1983, H.R. 3605, 98th Cong.,

1st Sess. (1983) (amending 21 U.S.C. § 355(b) to allow faster marketing of new generic drugs

equivalent to approved new drugs); Patent Term Restoration Act of 1983, S. 1306, 98th

Cong., 1st Sess. (1983),

S. CONG. REC.

6863 (daily ed. May 17, 1983), 26 Pat. Trademark &

Copyright J. (BNA) 87–88 (May 26, 1983) (amending 35 U.S.C. § 155 to add to the patent

grant a period of time equivalent to that lost due to regulatory delay)).

8. 733 F.2d at 860.

9. 21 U.S.C. §355.

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